My Time Machine backup is getting near capacity. Is it possible to add another drive that will be an extension to the current or do I have to start over with a bigger drive?

I'm currently using an iMac with latest OS and WD 2TB Firewire 800 externals.

I'm assuming your drive is filled up due to media files? Have you considered permanently backing up those files? I look at Time Machine as an operational backup system, not something for archival or long term storage. You are much better off eventually moving those files into a more permanent location and giving your Time Machine drive and your internal drive room to do their thing.

"Time Machine is a backup utility, not an archival utility, it is not intended as offline storage. Time Machine captures the most recent state of your data on your disk. As snapshots age, they are prioritized progressively lower compared to your more recent ones."